Some snippets from the article, that would give you a good understanding of ACO.

"ACOs are groups of providers that have been assigned a projected budget per patient. If the cost of caring for the patient comes in below that level, the group/payer shares the savings. The idea is that doctors will better coordinate care to prevent wasteful or ineffective treatment. With accountable care organizations, the theory is that if the provider does a good job taking care of the patient, something the insurer can track with quality metrics, the patient's health will be better, they will use fewer and less expensive services, and, therefore, they will cost less to insure. Medicare is running two pilot versions of the program. In one, providers may sustain losses if they're over budget but can be handsomely rewarded if they're under. The other rewards providers for coming in under budget but has no downside risk. The government is monitoring quality to make sure providers aren't skipping necessary treatment to come in under budget. Making ACOs work will require many organizational changes on the part of providers. They'll have to orient their systems more around quality than quantity. They'll have to track patients closely, using new analytics, to make sure their status is improving. And they may focus on high-risk, high-cost patients, using analytics and tailored interventions to help them. The payoff for improving the health of that population could be substantial."